Get Ready For Pay Cuts, As Work-From-Home Endures

to work from safe places, their homes preferably. Then it was clear this wouldn't be a short term phenomenon, so some workers wanted to swap out those homes for other homes, maybe even other states. But what do the companies do those that are still paying rent for those employees at work spaces. Well, Noah bu Hire is real estate reporter for Bloomberg News. He has the cover story of the new issue of Bloomberg Business Week magazine and it's called the Work from Home Boom is here to stay. Get

ready for pay cuts. No, it's a great story. Talk to us about the decisions that companies are having to make now nine months into this pandemic, with no end in sight and the possibility of a very changing geographic workforce. Yeah, thanks for having me on. I I think it's a it's a really interesting question and and a lot of this has been evolving over the course of this year's Companies have have realized that UM workers, their employees can

be quite productive at home. They're they're certainly drawbacks and I think we're starting to see that. So what companies are are are starting to do is come up with policies UM that imagine, you know, what the rules of the road are going to be when UM, when offices can be reopened safely? You know, do you have everyone come back UM every day of the week. Are they doing more hybrid schedules coming in a few days a week? UM?

And to what extent do you allow workers who want to UM just to move somewhere in in entirely different UM. Maybe it's a small town, maybe it's closer to family, but somewhere that's not so close to the office. Well, there's this new little phrase that's coming in and something tells me that we're all going to be using it very soon, called localized compensation. What is that? Well, it's it's just it's an idea that's been around and been

in practice for for a long time. I mean, companies, even the federal government paid different wages for the same work in different places. And and it's just a reality that the cost of labor and the cost of living

very um widely across the US. And as a result, UM companies try and pay in accordance with local labor market conditions and with you know, something that would allow their workers, um, if they're you know, professional to live a sort of what we consider a professional lifestyle and fill in the blank city and um, you know, there's data out there, and companies use this data. But now they're having to think about, well, how do we um pay people who make these voluntary moves to places where

we may not have an offer? Right, Because if some of what you're pay is based on is the city that your headquarters is in. You can imagine how companies would feel a little odd if if cuddenly you went to a place where the cost of living was half the price or what have you. There's gonna be a lot of litigation about this though, right. I mean, workers are going to make the case that there is them, whether they're in New York City or San Francisco or Montana you know, I think there are a lot of

strong feelings about this. I don't know if there's going

to be litigation per se. I mean, this is something that's been around for a while, and I think a lot of people who have made these moves, including some of the employees I interviewed from my story, get that if you're living in a place that's cheaper to live, it's there, um in a way to be paid less, and that in many cases um companies are still paying you, uh so that you can afford a similar lifestyle or even a better lifestyle in the place you've chosen to relocate.

I mean, how much is a company entitled to know if you if you move back in to your parents, for example, and you're not paying any rent, you're not paying any utilities, or you're just giving your parents. I mean, is that something a company is entitled to take into account? Imagine say those parents who are in a city. Yeah. Yeah, I mean, look, I don't I don't think there's any evidence that that's how these policies are being rolled out in In fact, I mean that sounds like more of

a temporary arrangement. And the company I've profiled, Red Finn you know, explicitly says that these temporary moves that are happening during the pandemic, those they're not adjusting pay for those people. They're They're talking about folks who are making a life decision to say, leave New York and moved to Rochester closer to where they have family, and they're settling down there. It's these are these are these are

permanent moves. These are not um, you know, I'm trying to keep myself and my family safe during the pandemic. I'm going to leave this town. These are These are people who are making long term decisions. Yeah, it's going to be so interesting to see what human resource departments do after people are vaccinated. I mean, will they hold you know, recruitment events in all sorts of places and be quite happy to to take somebody on staff from a state that is nowhere near a headquarters or even

an outpost. It will be interesting to see, Yeah, and I think that's what we're seeing. So yeah, yeah, it's it's fascinating. It gives the American labor force so much more choice and also makes makes the possibility for it to be more mobile, right, And that's been one of the problems for the American labor force. It's it's not as mobile as other labor forces, and you know, going across state lines and so on entails all sorts of other sort of tax rules and so on. So see

how that all plays out. But no, I do want to ask you though, um banks. For example, you know, there are certain banks that are talking about increasing bonuses for some of their star staff this year. And it's not just the banks. So on the one hand, we're seeing them try to cut costs, maybe close headquarters, close some of their office buildings and so on. But they're not docking pay or reducing pay for their such star stuff,

are they. No? I mean, look that that that seems to be the evidence that that our colleagues here Bloomberger are reporting um. But look what what my story is really about or is a long term shift and how companies are thinking about this and for all those star

traders who maybe getting bigger bonuses. I think we're seeing some early indications that Wall Street firms are looking at what positions don't have to be in New York and what they can move to lower cost places, and and and frankly, some of some of their back office staff. Some of their staff might find that they can lead better lives if if they can live in you know, say Nashville or Dallas, than than having to live in

the New York City metro area where costs are significantly higher. Right, and sometimes it takes almost as long to get into the city from the likes of Brooklyn. Just getting Noah, thank you. There is room for just a little levity here as well. Noah bue Hire, real estate reporter with Bloomberg News, has been doing a lot of research on this on the work from home boom and what it really means for the workforce of the future here in

the United States, So do check out his story. It is the cover of the new issue of Bloomberg Business Week magazine, available now on newsstands and at Bloomberg dot com. And they're always great reads, great graphics, and a great pictorials associated with these cover stories, so this one is no different. I really are due to check it out. So that does it for this week for Bloomberg Markets ten to twelve show. Do stay tuned. Balance of Power is next and we'll bring you up to date on

stimulus talks and what's going on in Washington. D c and as four markets. Right now, the SME five hundred is down more than half percent, so is the Dow Jones Industrial Average NAZAC is down, but not by as much, done by a quarter of a percent or so. We have the VIX at twenty three, the Dollar index just

inching above ninety once again. And for those of your keeping track of Brexit, there's still a couple of days left for a potential deal Sunday night is it's if it wants to get ratified by all the twenty seven countries before the end of the year. Right now, the British pound has come off about three tenths of a percent versus the euro training at one ten. The Conference Board leading Index of Economic Indicators came in better than

forecast in November at point six. Economists, we're looking forward to show a point five reading. Not only that, but the October data was revised better as well, the overall index coming in at positive point eight in October when the original reading was positive points seven. Let's bring in somebody who knows a lot about what's going on underneath the surface here, and that is Dana Peterson, chief economist for the Conference Board. Dana, what is actually leading the

leading index. Sure absolutely when we look at the details here, there's been a surprisingly a lot of very positive contribution from jobless claims, which added two tenths of a percentage point to the overall six tenths increase UM. Also, I S M. New words continue to be strong, as well as contributions from building permits and stock prices. So some

of these areas are not at all surprising. Uh. Certainly, we know that manufacturing uh uh new orders have been improving with improving trade globally, and also as many businesses, factories can affect social distancing. We also know that construction, residential construction has just been booming. It's on fire in the US, and so it makes absolute sense that permits

have been um very positive contributors. And finally, when we look at stock prices, indeed, the text sector healthcare stocks UM also to a certain degree, financial stocks UM have been driving gained and so all those things are being reflected in the overall measure. So the leading index, you know,

rebounded quite quickly and was extraordinarily positive. At one point it was you know, above two, as close to three, and now we're sort of coming back down to earth at what point will it start to concern you in terms of the reading for the leading in next I mean, we're already a little bit concerned by the fact that you know, with each even though each month shown a

positive reading, it's smaller. And so that suggests that we did, uh see a deceleration and growth heading into the last quarter of this year, and that potentially the first quarter of next year we might see a soft patch. Um. Certainly we've also seen uh this behavior reflected you know, more retroactively, of course, but in the jobs data, as payroll gains have been smaller and smaller and the unemployment

rate is falling at a more glacial paste. Um. So we are keeping watching this and you know, seeing whether or not there's going to be a second dip in our leading index and also our concurrent uh leading in concurrent measures of activity. Dana, what is the conference forwards

current outlook for inflation next year? Yes, well, we have inflation rising a little bit, um but staying beneath you persent, uh, and really that's going to be a reflection of you know, basis effects from very weak inflation this year twenty but also a rotation of consumption. You know, a little less spending on goods, more spending on services, um, where you could see a little bit of inflation there um, But all on all pretty modest inflation outlook, so not too

much concern there. There are some economist, I suppose, trying to sound an alarm on that. Dana, you also did a really phenomenal study into the impact of the pandemic on race and also the impact of the pandemic on women, and you found something very disconcerting when it comes to studying the female labor force. You're actually calling it a she session. Can you explain to us some of the

key findings of that report. Sure. Absolutely. What we've seen is that, especially in the US, where we have the most complete data, very early on in the pandemic, women suffered much deeper job cuts than did men. I mean, it was horrific across the board, but it was much more cute for women. And a lot has a lot of that to do with the fact that women are working in many of those sectors that have been very

negatively impacted by covid UM. But as we saw job gains pick up, um, we saw more women exiting the labor market, and we believe that's a function number a few things. Number one, the fact that you know, there's still this childcare crisis in the US that was there before the pandemic but has only gotten worse. Um. Many times women find themselves that they are tasked with caring for older adults. But also many kids are in and out of school physically, and so oftentimes the responsibility of

educating children from home falls on mothers. And so we've seen a lot of women exiting the labor market. That's very apparent in the payrolls data. Um. Sorry, uh yeah, pyroll report, Friday Employment report that comes out where labor

market participation among women has been falling. Yeah. And as you say, even if the job exists, in some cases, women have to leave it because they just have responsibilities that they can fulfill at home unless they're They're right, Dana, how much of this will turn out to be structural unemployment for women? Will the female libor force bounce back

as quickly as as the male labor force. Well, our hope is that this will be a blip and that female labor force participation as well as male labor force participation will bounce back and return to pre coronavirus levels. But you know, certainly the longer people are out of the labor market, the more difficult it is for them to rejoin because of perceptions that you know, either their skills of actro feed or they're credit going to be behind.

So it's going to be very important for employers to find ways to encourage flexibility in labor force, in labor market activity UM in terms of allowing people to work from home, potentially providing on site or near site childcare UM, and also reskilling their workers and training to make sure workers get back on track UM such that we don't have this these permanent losses in the labor market among women as well as among men. Dana, we're pretty out

of time. But what's the GDP forecast from the conference board? For one, Yes, we're expecting growth at three point six percent next year. Okay, three point six percent not not negative girls at least, but we'll need a little bit more than that. De bounced back probably from where we're from. Dana, thank you so much for joining. That is Dana beats In, chief economist with the Conference for there this as the leading index comes in a little better than forecast, but

as Dana said, slowing all the while. This is one of the stories that's extremely disconcerting and also filters out slowly, such that you don't really know exactly how big or important to story it is for a little bit after the original announcements. I'm talking about the hacks, the hacks that have been filtering out news wise in the middle of this week and even more yesterday. Let's bring in somebody who's up to date on what it all is

and how concerned we should be. Car Tike me Rota covers security and particularly computer security, cybersecurity and the like for Bloomberg News. Cartike bring us up to date on exactly who was attacked and how many at hacks there were. Yeah, we are still figuring this out. It's been almost a week since. Um no, it's been ten days. And excuse me. The fire Eye breach was first prepared publicly, and since then it's just been a lot of questions and very

few answers. What we do know is that a handful of federal agencies were targeted, including Commerce, Treasury, parts of d h um AND, as well as the Department of Energy and the Nuclear Administration. UH. These very sophisticated Russian attackers have been targeting UM critical infrastructure and entities that are of government interest. But exactly who has been targeted and the scope of the attack is still up in

the air. There are, uh, you know, federal investigators, private investigators at Microsoft and other incident response companies that are you know, pulling apart pieces of this. The scope is massive. The company that was breached Older Winds. They provide I T solutions largely for the federal government, but also they're they're all over the place. They work with UM, but financial institutions, telecommunications companies, defense contractors. They're a third party

that's part of the security supply chain. UM that was targeted and using a software update, UM malware was was inflicted upon up to eighteen thousand of their clients. Now that doesn't mean the eighteen thousand victims exist. These Russian attackers are very sophisticated, very meticulous and detailed in the way in which they're targeting their victims. So as of now we're hearing and there are potentially dozens, maybe up

to hundreds of victims. So of those seventeen thousand, there are about UM forty two two maybe over a hundred victims so far, but UM, that number is going to go up as time passes. UM. It's it is a tedious task trying to figure out if you have been targeted. And that's what most companies, most agencies are doing right now. Amazing.

And it's suspected Russian hackers. Now we don't know what they've got, how much of it they have, But assuming they have something, will they be able to interpret data, will they be able to extract useful information? Or is this just data that will be coming in, you know, in in megabytes to the Russians and they they'll find it difficult to actually do anything with this. Yeah, no, they know what they're doing. UM. We don't have evidence

of acciltration yet, but it's it's obviously a cause for concern. UM. You know, when when any adversary has this level of unmitigated long term access, which goes back at least to March, if not further. UM, surely they will have gotten their hands on UM files and data that companies and governments of the United States would have preferred they not have their hands on. Now, exactly what they have and how it will be weaponized is uh still a question that

we're all trying to answer. But you know, the presumption is that they knew what they were looking for, they likely got access to at least portions of it. And this is intelligence that will feed their UM operations, right. Uh. They're geopolitical status, you know, trying to assert Russia as a UM, you know, a power on par with with other UM economic superpowers, even as that country's economic prowess

sort of dissipates. This is a tool and a mechanism to to show the world that they're still on the on the platform. And uh, you know, depending on what the intelligence tells them, they could use it for um uh for political purposes or otherwise cardigate in a sense, the damage has already done. What kind of authorities do to try to mitigate the damage or prevent weaponization, as

you say, including President Trump. Yeah, so you know, companies that have been exposed have been directed by the Cybersecurity Infrastructure Security Agency to cut off UM any portion of their network that has UM the Solar Winds malware and

and if they can uninstall it altogether. UM at this point, UM, so what happened is that when when the malware was installed in uh in devices, these uh, these victims had to figure out if they were actually then targeted UM with an attack, was that malware activated to spread through that network and infect it. And so that is what investigators are doing right now, and it's a tedious task because these attackers have cleaned up their footprints as best

they can and are are. So it's a manual operation. In some cases, they're going through thousands of lines of code to see if anything's wrong. UM. The National Security Advisor Robert O'Brien cut short and overseas trip earlier this week to come back to Washington help manage the crisis. That's what the administration is doing right now is sort of an all hands on deck situation to figure out exactly the scope of the operator. Cartigue, it might be up to you to keep us all informed. So thank

you for all of your work so far. Cartigue. Me Rota on the Russian linked solar winds hack do follow him all right? Well, we know that Maderna vaccine is one backing from FDA advisors that puts it on track to be the s con cleared in the US, perhaps even as soon as today. For more on this and as well the little hiccups that we've been seeing with the rollout of the vaccine small though they maybe let's bring in Laurences our Associate Professor of Emergency Mendicine, JOHNS

Hopkins School of Medicine. So, doctor Saur, is there anything that you've seen in terms of the little hiccups that we that we've heard about, from discarding doses at modern after a filtration issue to the idea that you know fis are actually had more doses in its vials than previously known. Anything that gives you cause for concern. I think concern might not be the right word, but I think it just demonstrates that the these other elements of

vaccine distribution are so critically important. Right. It's not just UM getting the science behind making the vaccine and testing the vaccine, evaluating the vaccines efpacy, but UM the supply chain, so ramping up dose production, making sure that the process to get it into the hands of vaccinators and before getting vaccinated works m making sure that people believe in the process and and trust the process enough to get

the vaccine. All those things are showing how critically important they are, and these hiccups are um par for the course. In this very short ramp up of production. But I think it just demonstrates how careful we have to be in this process to make sure that we're using every precous, precious dose that crosses our hands. Do you have confidence

in the distribution system as it is now? Yeah? I mean I think that we're seeing that the distribution system is working as well as could possibly be expected given the short turnaround. I think some of the feedback that we're hearing from FISER and the administration and the possibility that pure dirsors will go out shows that it's far from perfect, and UM, communication becomes critically important in these um,

this really intricate distribution process. UM. I think seeing things like the potential for an extra dose or two in the FISER vials, hearing that some of the production delays, I think, UM, we we're seeing that actually there's a lot of eyes on on the process and that the kings are being worked out really quickly, which is great.

So even though we're identifying challenges in the process, we're working through them, you know, in this like whole response that allows us to fix it and and and improve

efficiency as quickly as possible. That's such a great point because everybody really has the same goal here on that the idea that there might be extra doses in the Fiser vials, is there anything that concerns you about that, because it seems to me that you know, if Fiser won't you officially say there's more than five, then are you at risk of getting just a little bit less than the dose that you need or just a little bit more than the dose that you need. It seems

a little vague for me. Yeah, I understand that completely. I think you know these vials are they're doing that because they want to ensure that that there's no um

undercutting of what they expected. Sans are right, So um, the idea that that there may be an extra dose or an extra dose and a half in these vials is not unreasonable given the scale that we're talking about and how quickly things are being partitioned and measured out the The I think the risk comes when you try to say like, oh, yes, you could get six, you could get potentially six and a half or seven. UM. But if you tell everyone there's five doses in this

file and you should get five doses, you're not. You have less likely that people are going to get UM a smaller dose right. So, um, perhaps it will be surprised with an extra dose and you can vaccinate several hundred extra people over the course of the projection. UM, But you don't risk under underestimating or you don't risk overestimating who you can vaccinate, so you don't risk people

getting left out. Is there a little bit of a danger though, if there is you know, a half doals left and somebody decides they'll combine that with a half doals from another vial, does that not sort of letting the risk of contamination and so on? Lauren, Yeah, I think we want to We don't want to see that so UM. I know many places have made the determination

not to combine partial doses from multiple vials. So that might mean a little bit of wasting at the at the bottom of that bial um, but that's really a safety issue that I think it is the right decision to not combine partial doses. It gets into measurement challenges, it gets into contamination challenges, and it gets into like

basic accounting challenges. So when you're thinking about who you vaccine and how you track them, UM, you want to be sure that you're not taking those those steps where error can enter because You'll also have to follow up all of these people with additional vaccinations for their booster shops, and so you want to make sure that you have the appropriate number of booster shops for the people that

you've vaccinated initially as well. I mean, there's so many things that have to go right here, and having seen how the PPE distribution system worked, it doesn't inspire that much confidence. But I guess, I mean, is there any room for let's say criminality here? I mean, can can people managed to get away with the types of things that were getting away with when it came to PPE, selling selling stuff online illegally and so on. I think that, um,

it's a slightly different environment. UM. I do I share the concern that there are potential for UM for bad actors. I think we always see that in emergencies because there's um, you know, when the regulations become relaxed, or when UM you know, there's a lot of misinformation and disinformation spreading.

UM that's where these people and these activities flourish. I think there's a lot of eyes on this process, and there's so few places where you can actually get UM legitimate vaccine supply that it's much less likely that you will see this happen because somewhat a new company could pop up and say we're making an N and five. It's totally approved. You're good. You're not going to have a new company pop up and say we've reproduced the

Visor vaccine. You're totally good. It's trying to take it so to about the number of eyes on all of this process. Lawrence, thank you so so much, as always as Lawrence Sauer, Associate Professor of Emergency Medicine at Johns Hopkins University. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on

Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio